🍟 1/3/2022 – Turning iPhone Accessories Into Cash
Level 5 Capital Purchases 112 OrangeTheory’s
L5 Fitness, the franchisee platform of Atlanta-based private equity firm Level 5 Capital, acquired 112 OrangeTheory Fitness studios for an undisclosed amount.
Prior to the purchase, Level 5 had 22 OrangeTheory franchises in Michigan, in addition to owning locations of CorePower Yoga, Restore Hyper Wellness, and a Series B investment in HeyDay.
The Wolf’s Take
OrangeTheory might be the best franchise to have owned in the last decade. After being founded in 2010, it already has 1,300+ locations worldwide.
When a franchise gets to that kind of scale, you can expect consolidation to occur – be it from large franchisees buying up smaller ones, or PE coming in and taking over a number of locations. I’d guess many franchisees just got a nice payday.
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Franchise of the Week
- Founded: 1953
- Units Open: 39,396
- Investment Range: $1.3M – $2.3M
- Average Revenue per Location: $2.9M
Did you know?
McDonald’s franchisees give out a “Gold Card” to special VIP’s. Having the Gold Card means free food for life. Holders of this card include Bill Gates, Warren Buffet, and actor Rob Lowe (as if they can’t afford the food ).
- Founded in 2004; franchising since 2012
- Based in Utah; 97 locations open as of 2021
- A retail franchise that sells accessories for smart phones and other devices (iPads, Nintendo switches, AirPods, Apple watches, etc.)
Fees + Investment
- Royalty: 5% of gross sales
- Brand Fund: 1% of gross sales
- Franchise Fee: $15,000
- Initial Investment: $49,000 – $88,000
- The below tables represent information from 97 franchisees in 2020 that were open for at least 1 full month
The Wolf’s Take 🍟
Zagg appears to be a very high margin business, and when you extrapolate the revenue on an annualized basis, it’s conceivably doing $282,900 per year in revenue off of at most an $88k investment.
This is impressive performance through covid, especially considering that many locations function as mall carts / kiosks. With 80.63% of the world’s population owning a smart phone (per Statista), Zagg operates in a recession-resistant niche with a massive customer base.
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